analysys mason direct carrier billing mar2013 sample toc rma03
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Direct carrier billing: giving CSPs a share of the mobile payments market
Research Report
Direct carrier billing: giving CSPs a share of the
mobile payments market
March 2013
John Abraham and Justin van der Lande
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Direct carrier billing: giving CSPs a share of the mobile payments market
Contents [1]
5. Executive summary
6. Executive summary [1]
7. Executive summary [2]
8. Recommendations
9. Recommendations for CSPs [1]
10. Recommendations for CSPs [2]
11. Recommendations for vendors
12. Market definition
13. Direct carrier billing is only one of many mobile payment options butoffers the best opportunity for carriers to generate mobile revenue
14. Direct carrier billing provides another payment option at checkout
15. Process flow between the entities involved in direct carrier billing
16. DCB has to support a multi-channel delivery ecosystem that is changing
rapidly driven by technology, economics and regulations
17. The role of mobile payment vendors within direct carrier billing
18. Business environment
19. The business environment in 2013 is encouraging mobile operators to
develop new value-added service revenue
20. Mobile payments are set to grow as the world continues to move to
mobile devices – 400 million European users will pay for mobile content
in 2016
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21. In developed markets, including Europe, CSP revenue from voice and
messaging is declining, so is their share of mobile content and apps
22. The potential market for DCB addresses not only the ‘unbanked’, but all
users of smartphones worldwide
23. Younger consumers use more apps, indicating that teenage users are a
ready target for direct carrier billing
24. CSPs should initially target contract customers because they are more
likely to have smartphones and margins are better
25. DCB has much lower drop-out rates than other payment methods, so
although settlement rates are lower, overall revenue can be higher
26. Direct carrier billing
27. CSPs’ DCB revenue will grow significantly during the next 10 years and
will replace PSMS as the payment option for CSPs
28. Direct carrier billing functionality is provided through managed services
as well as traditional on-premises software
29. Developments in the direct carrier billing market
30. Regulation of the direct carrier billing market
31. Trends in direct carrier billing
32. Revenue splits [1]
33. Revenue splits [2]
34. Market drivers and inhibitors
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Direct carrier billing: giving CSPs a share of the mobile payments market
Contents [2]
35. Direct carrier billing market drivers [1]
36. Direct carrier billing market drivers [2]
37. Direct carrier billing market inhibitors [1]
38. Direct carrier billing market inhibitors [2]
39. Use cases
40. Facebook offers direct carrier billing as a payment option for its platform
purchases
41. Skype implements direct carrier billing to widen its market reach
42. Virgin Media offers direct carrier billing as a means to pay for digitalcontent
43. SFR implements direct carrier billing as a means to generate revenue
from the burgeoning mobile apps market
44. Vendor snapshots
45. Aepona
46. Bango
47. BOKU
48. Fortumo
49. MACH
50. Netsize
51. Payvia
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52. Vendor analysis
53. Vendor analysis [1]
54. Vendor analysis [2]
55. Vendor analysis [3]
56. Mergers and acquisitions
57. Mergers and acquisitions in the direct carrier billing market
58. About the authors and Analysys Mason
59. About the authors
60. About Analysys Mason
61. Research from Analysys Mason
62. Consulting from Analysys Mason
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Direct carrier billing: giving CSPs a share of the mobile payments market
List of figures
Figure 1: The mobile payment ecosystem
Figure 2: Segmenting mobile money
Figure 3: The entities involved in DCB process flow
Figure 4: Typical DCB process flow
Figure 5: DCB ecosystem relationship
Figure 6: Types of role that vendors play within direct carrier billing
Figure 7: Mobile handset content and applications subscribers by region,
Europe, 2011 –2016
Figure 8: Messaging revenue by type and its share of total mobile revenue,
Western Europe, 2009 –2017
Figure 9: Frequent users’ share of total mobile content and apps user baseby age
Figure 10: Smartphone ownership by pricing model
Figure 11: Publisher revenue, credits cards versus direct carrier billing
Figure 12: CSP revenue for direct carrier billing, worldwide, 2012 –2023
Figure 13: Vendor revenue from direct carrier billing software solutions,
worldwide, 2012 –2017
Figure 14: Revenue splits for direct carrier billing
Figure 15: Revenue splits for traditional payment methods
Figure 16a: Direct carrier billing market drivers
Figure 16b: Direct carrier billing market drivers
Figure 17a: Direct carrier billing market inhibitors
Figure 17b: Direct carrier billing market inhibitors
Figure 18: MACH’s billing relationship with Skype
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Executive summary
Recommendations
Market definition
Business environment
Direct carrier billing
Use cases
Vendor snapshots
Vendor analysis
Mergers and acquisitions
About the authors and Analysys Mason
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Direct carrier billing: giving CSPs a share of the mobile payments market
Executive summary [1]
Direct carrier billing (DCB) enables communications service providers (CSPs) to directly participate in the over-the-top market by
providing a payment option for consumers directly on to their mobile phone bills. CSPs can take a margin for providing the paymentservice, which might grow to provide significant revenue.
Analysys Mason forecasts that DCB will provide CSPs with more than USD12 billion in revenue in 2022 – a significant stake in the
growing mobile payments market.
DCB (also known as ‘direct operator billing’ or ‘billing on behalf of’) enables consumers to pay for goods and services from third-
party publishers, merchants and applications stores via their mobile phone bills. This builds on established payment methods
offered by CSPs via premium rate SMS and phone numbers, and earlier WAP initiatives.
The DCB market has huge potential for growth, but regulatory challenges and competitive pressures from other payment
technologies mean that CSPs will need to address a number of issues to win their share of the payments market.
DCB has several limitations when compared with other mobile payment options. The most significant limitation is the type and value
of goods that can be purchased. Addressing these legal and trade restrictions will require industry-wide co-operation.
Although it is considered that DCB will be most successful in emerging markets with low penetration of formal banking services, we
are aware that DCB services are taking off in developed markets where ‘unbanked’ teenagers and the convenience of DCB are
helping to drive adoption. Conversion rates – that is, the percentage of mobile consumers who buy digital content – are reported to
be ten times higher in markets where DCB has been implemented than in markets that only have other mobile payment options,
largely because of DCB’s ‘frictionless’ checkout capabilities.
In the past 18 months, CSPs have begun to:
partner with payment intermediaries in order to support as many applications, merchants and developers as possible
work within a lower margin framework compared with premium SMS to enable them to compete with credit-card-based payment
systems – in some cases, when transaction values are low, credit cards can be more expensive than DCB in terms of the pay-
out rates to merchants and stores.
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Direct carrier billing: giving CSPs a share of the mobile payments market
Direct carrier billing is only one of many mobile payment options but
offers the best opportunity for carriers to generate mobile revenue
Worldwide mobile payments are expected to reach over
USD600 billion by 2016. DCB offers CSPs the ability toparticipate in this significant and growing revenue stream.
DCB has been available for many years for telecoms
services – for example, in the form of payments via premium
SMS and premium-rate calls. However, the technology has
evolved significantly in recent years to include payments for
digital content.
Large CSPs such as AT&T, Rogers Communications,
Telefónica and Vodafone have adopted DCB to provide anopen standard for a growing number of applications.
DCB involves payments that mobile CSPs can credit to
customers’ monthly phone bills (in the case of postpaid
subscribers) or debit from their prepaid balances. Currently,
purchases are limited to mainly digital goods and services
such as mobile games, films, music and in-app purchases.
Other related areas include mobile banking applications,
mobile payment terminals and the interaction with vouchers,
which may represent some opportunities for CSPs.
Figure 1: The mobile payment ecosystem [Source: Analysys Mason, 2013]
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C
u s t om er
P u b l i s h er
(
A p p s , c on t en t
an d a p pl i c a t i on s t or e s )
Premium-rate SMS
Premium-rate voice
WAP
Direct carrier billing
Mobile wallets
Online payment
Credit cards
Debit cards
Bank payments
Remote
selling
Bank
CSP
Mobile transaction
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Direct carrier billing: giving CSPs a share of the mobile payments market 58
Executive summary
Recommendations
Market definition
Business environment
Direct carrier billing
Use cases
Vendor snapshots
Vendor analysis
Mergers and acquisitions
About the authors and Analysys Mason
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Direct carrier billing: giving CSPs a share of the mobile payments market
About the authors
John Abraham (Analyst) is a member of Analysys Mason’s Telecoms Software Research team and contributes tothe Revenue Management , Service Fulfilment and Customer Care programmes. He has more than 5 years’
experience in the telecoms industry. He has worked for a global OSS vendor and implemented revenue
management solutions for Tier 1 telecoms operators in Europe, India and the Middle East. John joined Analysys
Mason in early 2012. He holds a bachelors degree in computer science from Anna University (India) and an MBA
from Bradford University School of Management (UK).
Justin van der Lande (Senior analyst) leads the Revenue Management programme (formerly Billing), which is part
of Analysys Mason’s Telecoms Software research stream. He specialises in business intelligence and analytics
tools, the functionality of which cuts across all of the research programmes in this area. He also provides projectmanagement for large-scale projects within our Telecoms Software research. Justin has more than 20 years’
experience in the communications industry in software development, marketing and research. He has held senior
positions at NCR/AT&T, Micromuse (IBM), Granite Systems (Telcordia) and at the TM Forum. Justin holds a BSc in
Management Science and Computer Studies from the University of Wales.
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Direct carrier billing: giving CSPs a share of the mobile payments market
About Analysys Mason
Knowing what’s going on is one thing. Understanding how to take advantage of events is quite another. Our ability to understand the
complex workings of telecoms, media and technology (TMT) industries and draw practical conclusions, based on the specialistknowledge of our people, is what sets Analysys Mason apart. We deliver our key services via two channels: consulting and research.
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Consulting
Our focus is exclusively on TMT.
We support multi-billion dollar investments, advise clients on
regulatory matters, provide spectrum valuation and auction support,
and advise on operational performance, business planning and strategy.
We have developed rigorous methodologies that deliver tangibleresults for clients around the world.
For more information, please visit www.analysysmason.com/consulting .
Research
We analyse, track and forecast the different services accessed by
consumers and enterprises, as well as the software, infrastructure
and technology delivering those services.
Research clients benefit from regular and timely intelligence inaddition to direct access to our team of expert analysts.
Our dedicated Custom Research team undertakes specialised and
bespoke projects for clients.
For more information, please visit www.analysysmason.com/research .
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Direct carrier billing: giving CSPs a share of the mobile payments market
Research from Analysys Mason
We provide dedicated coverage of developments in the telecoms, media and technology (TMT) sectors,
through a range of research programmes that focus on different services and regions of the world.
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Alongside our standardised suite of research programmes, our Custom Research team undertakes specialised, bespoke research
projects for clients. The dedicated team offers tailored investigations and answers complex questions on markets, competitors and
services with customised industry intelligence and insights.
To find out more, please visit www.analysysmason.com/research.
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Direct carrier billing: giving CSPs a share of the mobile payments market
Consulting from Analysys Mason
For more than 25 years, our consultants have
been bringing the benefits of applied intelligence
to enable clients around the world to make
the most of their opportunities.
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Our clients in the telecoms, media and technology (TMT)
sectors operate in dynamic markets where change is
constant. We help shape their understanding of the future
so they can thrive in these demanding conditions. To do
that, we have developed rigorous methodologies that
deliver real results for clients around the world.
Our focus is exclusively on TMT. We advise clients on
regulatory matters, help shape spectrum policy and develop
spectrum strategy, support multi-billion dollar investments,
advise on operational performance and develop new
business strategies. Such projects result in a depth of
knowledge and a range of expertise that sets us apart.
We help clients solve their most pressing problems,
enabling them to go farther, faster and achieve their
commercial objectives.
To find out more, please visit
www.analysysmason.com/consulting .
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Direct carrier billing: giving CSPs a share of the mobile payments market
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